What is the relationship between interest rate changes and bond prices in terms of convexity?

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1236804

2026-03-31 00:55

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Changes in interest rates have an inverse relationship with bond prices. When interest rates rise, bond prices tend to fall, and vice versa. Convexity refers to the curvature of the relationship between bond prices and interest rates. Bonds with higher convexity are less affected by interest rate changes compared to bonds with lower convexity.

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